Student Loans – How the Loan Deferment Process Works
Most student loan borrowers can take advantage of the opportunity to defer (postpone) repayment of their student loans until their finances improve. In fact, for popular federal student loans, 36 months worth of loan deferment requests is available to you, in 6-12 month spans.
However, the amount of time you will be afforded to stop making monthly payments on your debt will vary depending on your school status, the type of loan you borrowed, your financial situation, and even your profession. The following steps will help you determine how long of a deferment you can expect to receive when it comes to delaying repayment of your student loans.
You can learn difference between deferment vs. forbearance to settle on which option is best for you.
You can get full timeframes of allowable deferment periods and grace periods at the studentaid.ed.gov website.
You can also find student loan deferment request forms available online, where you can download, complete and submit to delay loan repayments. (Note: your student loan lender may have these forms available online at their own website; content them and find out. If they do, then download THOSE forms and submit to defer student loans).
Once you have been graduated, the real fun begins: You will have a period of time — known as a “grace period” — before your loan repayment starts.
But if you have a Federal Stafford loan (referred to as a “Direct Loan ProgramSM” or “Federal Family Education Loan (FFELSM) Program”), you automatically will be eligible for six months on non-payments before monthly billing kicks into gear.
If you took out a Federal Perkins Loan (or loans), then you will have a period of nine months before repayment begins.
For PLUS loan borrowers, repayment is much more strict. The repayment period for all PLUS Loans begins when funds are fully disbursed’ the first payment is due within 60 days of the final disbursement.
A graduate student PLUS Loan borrower, however, is able to defer repayment while enrolled at least half-time, and, for PLUS loans first disbursed on or after July 1, 2008, for an additional six months after the borrower is no longer enrolled at least half-time.
Interest that accrues during these periods will be capitalized (i.e., added back into the loan balance) if not paid by the borrower during the deferment. (This also applies to a parent PLUS borrower who is also a student).
Moreover, parent PLUS Loan borrowers have more choices available to them. If their loans were first disbursed on or after July 1, 2008, they can choose to have their student loan repayments deferred while the student for whom the parent borrowed is enrolled at least half-time and for an additional six months after that student is no longer enrolled at least half-time. (Again, interest that accrues during these periods will be capitalized if not paid by the parent during the deferment.)
Following your period of deferment — your “grace period” — it is vital that you make your loan payments on time every month. Not exceptions! Late payments will destroy your credit score, and you failure to pay on time could lead to default of your college loans.
Knowing your time period that you are exempt from paying for your investment in your education will help you plan accordingly, so that when it comes time for you to resume repaying student loan debt, you will be aware of the new responsibility you have.
Use a simple calendar to mark off the due dates and line out the deferment period. Enter the end of your deferment into your cell phone calendar one week prior to resuming loan repayments. When the alarm sounds, you’ll know that it’s time to start writing out those checks again. On second thought, why not have the payment deducted automatically from your bank account on the day they are due? This way, there’s no way you’ll miss a payment or lower your credit score by missing a payment altogether.
No matter how much you owe on your student loans or how long of a deferment you get, you will ultimately be responsible for paying off these debts yourself. But now, Uncle Sam has stepped up with new options. In fact, your school loan debt might be forgiven after a period of 10-15 years under new laws recently passed by Congress and signed by President Obama.
Often referred to as “Obama Loan Forgiveness” this program aims to help students manage student loan repayments while beginning at the lower end of the career ladder. The idea is that by a certain number of years, the loan is forgiven. This new option portends a new way of financing college in the future, and will certainly offer new hope to college-bound students who might hesitate to go deep in debt to pay for a college degree without such loan forgiveness programs.
Loan forgiveness is another way to quit paying back your college loans, but the requirements for eligibility and the paperwork needed to get forgiveness is very complicated.
We’ve assembled some helpful free list of loan forgiveness programs at our website: http://www.findhow2.com/how-to-get-student-loans-forgiven.html
More Student Loan Deferment News:
According to a recent story broadcast on National Public Radio Sept. 8, 2010, “Americans now owe more in student loan debt than they do for all credit card debt.”
A recent report published by the financial aid website FinAid.org , published by Mark Kantrowitz, explores “why student loan debt has hit a record high” compared to other types of consumer debt. Listen and/or read this interview at NPR.org .
“There are many myths about student loan refinancing. Some of these myths are in your favor, while others are not. But in most cases, consolidation will benefit you and make your debts more manageable.”
Read all of this news article…
“Is student loan debt the next financial bubble to burst? All indicators are suggesting that it’s almost certain that student loan debt will go the way of the housing market.” This writer sure thinks so…. read more here:
“Deferment Requirements For Economic Hardship Deferment”
— Eligibility Requirements: Maximum Time Limit: 36 months
— Must Reapply: Every 12 months (unless you qualify under Condition #3 below)
— Requirements: To qualify, you must meet one of the conditions listed below and provide the required documentation for only that condition.
Get all the facts here….
Here is a great webpage that has consolidated a number of helpful tips aimed at improving your knowledge of getting a student loan deferment: http://www.mahalo.com/how-to-defer-student-loans. Check out their website and read up on deferment options.
Great article about how to dig yourself out of student loan debt . Very simple options to get student loan relief are within the grasp of all college loan borrowers. No, you won’t qualify for all programs that offer loan deferment or loan forebearance. But getting started researching your loan deferment options is your best option to tackling your debt problems.